As late summer discounts reach a fever pitch, Jean Chatzky examines the psychology of bargains
I thought I learned my lesson. Last year, I participated in an insane experiment called “Six Items or Less,” where I picked six items of clothing and then wore them (and only them, with a few exceptions like underwear and exercise clothes) for a month. Initially, it was maddening. Then, it was freeing. And when I emerged from my self-induced clothing diet, I had a new theory on how best to shop. Clearly – since almost no one noticed that my wardrobe was on a continuous loop – volumes of clothing weren’t necessary. Better to behave like the French and buy a few pricier pieces that would last and that I really loved.
And then I was invited to a black-tie event where my host said “short cocktail” rather than “long gown” was the way to go. I had two of the latter, but my closet seemed lacking in the former. Yes, I had a few dresses but they screamed bar mitzvahs-with-friends – not gala-with-colleagues. I went shopping.
After an hour in the communal dressing room, I emerged victorious and excited. I found two dresses, one a little more conservative than the other. Each had a price tag of roughly $400. Each was marked down to about $100. Oh, and then there was a sweater dress I could wear to work. It was $150 marked down to $59. Add in my 10% discount and I took home all three for a little over $200. I told my husband: I scored.
And then the night before the event I put them on – again – and realized, I didn’t actually like either one of the dressy dresses: One was too matronly, the other too tight. Even the sweater dress was overly bulky. What I liked, it turned out, was the fact that I seemed to have gotten so much for so little. What I liked, it turned out, was the sale.
William Poundstone, author of Priceless, a book that explores the psychology of prices, says I am a sucker. OK, that’s not an exact quote, but reading between the lines, that’s what he means. “One of the things we know about prices is that deep down we don’t know what anything should cost,” he explains. “Our unconscious mind uses cues to decide if things are a good value or not. And that means it’s very easy to fool people.”
Cues like? Having an advertised reference price, which is when you can see that something that originally cost $49.99 is now down to $29.99 (or in my case $400 down to $100). “When you tell people about this, they say ‘I’m more reasonable than that. I know it never really sold for the higher price.’ But when we do the experiment, we see that we are all influenced,” Poundstone explains. “Take that as a warning – when you see a tag take a deep breath and realize you’re going to be psychologically influenced.”
Exploiting the fact that an offer is for a limited time only or that only limited quantities are available is also very effective, he says. That’s why Neiman Marcus, for instance, litters your e-mail box with notices that from 11:30 AM to 1:30 PM – for two hours, today, only – such-and-such boots or dresses or sweaters are going on sale. And why Gilt has been able to train a cadre of shoppers to log in, precisely at noon (EST, of course) like so many Pavlov’s dogs.
And then there’s bundling. Walk through the supermarket – particularly in these post-recessionary times – and you’ll see signs for, say, 10 bottles of Snapple for $10. “What that tells you [again, unconsciously] is that other families are buying ten. And for that reason, you’re more likely to choose to do the same, or at least buy more than you would have otherwise,” he says, thus explaining the vast quantities of chickpeas in my pantry. “Most of the time if you do the math on these deals, you figure out the price is about what you should have been paying anyway.”
I feel pretty stupid, I ‘fessed up to Poundstone. Don’t be too hard on yourself, Poundstone cautioned me. “We all like to think we’re very rational. That we can lay out the reasons we bought such-and-such thing at such-and-such a price. But all the research shows this is part of the way the human mind works. We’re all very suggestible.”
So what do we do? Any time you see a sale, he suggests, ask yourself if you need it. And ask yourself if you’d want it just as much at the original price.
Then, when logic fails you at Loehmann’s (or wherever), do what I did. Return. And go to Bergdorf’s (or wherever) and spend the same amount of money on a single, full-priced dress you love enough to wear for years to come.